Michael Geoghegan, HSBC's chief executive, has taken personal responsibility for the bank's growing problem with US mortgages, which have forced Britain's biggest bank to issue its first profits warning.

"The buck stops with me," Mr Geoghegan said after the bank revealed the extent of the problems in its US business late on Wednesday night. As a result, analysts cut their profit forecasts by up to 10%.

While HSBC has made some management changes in the US, questions were being asked last night about the future of Bobby Mehta, head of the troubled division. HSBC refused to comment.

The unprecedented profits warning piled further pressure on Mr Geoghegan and the chairman, Stephen Green, both of whom have been in their roles since May, when Sir John Bond retired as chairman. They already faced criticism over their stewardship of the world's No 3 bank.

HSBC shares - the worst performing among UK banks - were at a nine-month low in early trading but they recovered some losses to close 14p lower at 917p as London investors digested the third piece of bad news about the US business in as many months. The bank has alerted the markets to some customers' problems repaying loans twice before. The latest warning helped drag down Wall Street yesterday. New Century Financial, a US firm with a similar business to HSBC, also warned that customers were defaulting.

Analysts had forecast bad debt provisions of $8.8bn (£4.5bn) but HSBC said it would overshoot this by 20%, taking the figure to $10.6bn. It is the bank's largest provision against bad debts and shocked analysts said it was the first time in memory that HSBC had released information ahead of its results on March 5.

Analysts at the investment bank Merrill Lynch, JP Morgan and Dresdner said they would cut their 2006 profits forecasts by 5%-10%. The previous consensus was for $24bn - the biggest profit ever of a UK bank. Even after the downgrades, HSBC may still be able to make record profits.

HSBC's problems are at what was Household International, which it bought for £9bn in 2003 in what was the bank's biggest ever acquisition - a deal which analysts and shareholders have since queried. Now part of HSBC Finance, Mr Geoghegan defended the business, which specialises in customers with lower credit ratings. "I've got 35 million customers and all of that [credit] data in middle America. This is a dream portfolio," he said.

The problem lies in a part of the business that focuses on "second-lien" loans, often known as piggybank loans because they are taken out as well as mortgages. As the US housing market has slowed, householders have been repaying their first mortgage but have been slower to make payments on their second home loan, which had been taken out on the back of higher house prices. The loans, from 2005 to 2006, largely sit in a portfolio of business that HSBC bought from rivals when it was trying to expand rapidly.

Mr Geoghegan said that he could not say that "it won't deteriorate any further" but said: "It won't happen again ... I'm embarrassed by what I saw happening. I'm committed to be as hands-on [as necessary]."

He made it clear that it was his responsibility to put it right, after more than 30 years with HSBC. "In this particular organisation we take our responsibilities very seriously. You don't put me in this position to not take it seriously," he said.

The previous US management had run the US mortgage business for volume. New managers have been installed, including a new chief operating officer and finance director, and Mr Geoghegan has been introducing new practices to set limits along geographic and product lines.

The City has been surprised by HSBC's problems in the US. It is a share that investors traditionally hold for when times turn bad so they are perturbed by the problems emerging when other UK banks are not suffering. British banks are expected to report record profits in the coming weeks.

One investor said: "This was a deal ... done in John Bond's watch but clearly [Stephen] Green is going to come under quite a lot of pressure."

James Eden, an analyst at Dresdner Kleinwort, said: "HSBC's profits warning will heap further pressure on the bank's management team, who have already been accused of being 'asleep at the wheel'."

Bid tip

A major British bank could fall prey to a hostile bid this year, banking experts at the consultancy Accenture predicted yesterday.

The banks seen as "swallowable" are Barclays, Lloyds TSB, Alliance & Leicester, the Co-operative Bank and Bradford & Bingley. Barclays, above, is the largest, with a stock market value of £50bn. The sector is often buoyed by takeover speculation. Late last year Barclays' shares were driven to record highs by rumours that Bank of America, the world's second-biggest bank, would make a bid and Lloyds TSB is often beset by rumours that it could attract a predator.

Julian Skan, of Accenture, said: "This is a bit of a punt but we think that somebody will try a hostile bid for someone in the UK this year." He said the predator would most likely be from the US. All of his targets are listed apart from the Co-op, which is part of the Co-operative movement. He said many international players were keen to gain a presence in the UK.Jill Treanor